Two years after Japanese pharmaceutical major Daiichi Sankyo acquired controlling stake in Ranbaxy Laboratories, India's biggest pharma company of the time, another small, yet significant transaction happened between the two parties (Ranbaxy was still listed as a separate company then). On July 2, 2010, Daiichi Sankyo and Ranbaxy announced that the latter's New Drug Discovery Research had been transferred to Daiichi Sankyo India Pharma Private Limited, and rechristened Daiichi Sankyo Life Science Research Center in India (abbreviated to RCI).
The move, which the company said was "part of the strategy to strengthen the global Research and Development (R&D) structure of the Daiichi Sankyo Group", effectively ended Ranbaxy's journey with drug discovery research -- a journey that had begun in 1994 under the leadership of then CEO and pharma veteran Parvinder Singh. Equally important, it signalled the Japanese major's intention to focus on creating promising new drugs out of India. That was a leap of faith for an organisation that was known for innovative products created at its research labs largely in Japan - like for instance, blockbuster broad-spectrum antibiotics Levofloxacin and Ofloxacin.
Today, the research centre in Gurgaon remains the last remnant, in terms of a direct physical presence and arguably a positive highlight, of around $10-billion (986.4 billion yen) Japanese pharma major's misadventure in India. It began with the acquisition of Ranbaxy in an over $4-billion deal (around Rs 20,000 crore then) in June 2008 with the promise of utilising Ranbaxy's resources to become a "global pharma innovator". This was followed by several run-ins with the US FDA over drug quality and what some saw as challenges around cultural differences between the two companies. Daiichi's India dream with Ranbaxy finally ended when it divested Ranbaxy to Sun Pharmaceuticals in April 2014. In fact, in the Daiichi Sankyo Group IR Report for 2015, CEO Joji Nakayama explains the rationale behind the decision to divest Ranbaxy: "We decided to shift our focus from a global hybrid business model, under which we developed both our innovative and generic business worldwide, to a business model under which we will concentrate on our innovative business. Reflecting this decision, in April 2015, we sold all of our Sun Pharma shares that we obtained in return for Sun Pharma's acquisition of Ranbaxy."
The RCI is now an integral part of this professed move to focus on innovation, and leads Daiichi's research in two main areas - infectious diseases and pulmonary diseases. Its other research centres - mainly two in Japan and one in Germany among others - focus on areas such as oncology, heart and kidney and other areas. However, infectious diseases, pulmonary and inflammation are not new areas of research for the company with a long history in drug discovery. But after the centre was set up in India, the company is learnt to have redesigned its other research centres - some of the work related to RCI's core areas that used to be undertaken elsewhere, including at its impressive four-storied building in Tokyo - and now prefers to let that happen in India.
Understandably, Daiichi Sankyo is rather chary about discussing details. After much persuasion, Yoshio Uchida, Vice President and Head, Operations and Management at Daiichi Sankyo India Pharma, sent in some answers to BT'S queries over email. "Currently, RCI is taking a role in therapeutic areas different from Japan's research activity," said Uchida. On Daiichi's vision and hope from its research centre in India, he says: "Daiichi Sankyo expects new drug candidates continuously coming from RCI in the areas of infectious disease and pulmonary disease."
In other words, for infectious diseases, the centre in India is to continuously feed the company's drug discovery pipeline with clinical candidates for new drug development. While Uchida would not reveal more, this would need to be seen in the context of how it has been trying to rationalise its R&D efforts in other geographies. For instance, this February, Daiichi Sankyo had announced its decision to close down one of its development subsidiaries, UK-based Daiichi Sankyo Development Limited, soon after its announcement last December about closing down a research subsidiary in Germany.
Daiichi has been extending both financial and technical support to RCI. Apparently, soon after the takeover of the centre from Ranbaxy in 2010, Daiichi retained its 200-odd employees and added a few based on project needs, but rebuilt and redesigned the centre to meet Japanese regulatory standards. Though Uchida would not share more, BT gathers that the centre in India still has 200-odd scientists - 100 in chemistry, around 60 in biology and the rest divided between areas like pharmacokinetics and toxicology.
"Infectious disease and pulmonary disease are major unmet medical needs in India. It is natural to focus on the research for the therapeutic area with unmet medical needs in the country, then expand globally," explains Uchida. Daiichi Sankyo's Japan research, he says, focuses on oncology, pain, CNS disease, heart and kidney disease, and rare diseases.
BT learns from other sources that the company is mainly looking at solutions for the third world and in particular for the Asian region. In fact, in infectious diseases, it is looking at areas like malaria, for instance, which may not be of much significance in Japan but would be highly relevant for India, Africa and other regions. The Indian market is of not much significance to Daiichi. The company remains in India largely because it seems to see the talent capability here, plus this region has a serious problem of antibiotic resistance. So, the bacterial population required for the company's study is higher here and perhaps there are some cost advantages, too.
At a time when few global companies are involved in research involving new antibiotics, Daiichi Sankyo, with its long history of innovation in infectious disease, wants to continue this work out of India. Other than products in this space, Daiichi has a track record of being an innovator company with products in the market from its own drug discoveries. In recent years, some of the important revenue earners for the company have been major drugs like Benicar (branded for Olmesatan) used to treat hypertension; Lixiana in some markets and Savaysa in others (edoxaban) is an anticoagulant or a clot buster; Efient or Effient (prasugrel) is an antiplatelet drug.
"Daiichi Sankyo has more than 100 years of scientific expertise and provides innovative products and services around the world," points out Uchida. "Our company draws upon a rich legacy of innovation and a robust pipeline of promising new medicines to help patients. We know it is a challenge, but it's our mission."
The company will hope the research centre will work out better for it than Ranbaxy did in generics